Appellate Tribunal rules on assessable value of goods: distribution charges excluded, freight charges included.

The Appellate Tribunal CEGAT, Kolkata held that distribution charges of Rs. 600.00 per MT should not be included in the assessable value of goods manufactured by job workers. However, the Rs. 60.00 per MT freight charges for transporting raw materials should be added to the assessable value. The Tribunal allowed the appeals, directing a recalculation of duty demand based on this ruling and setting aside confiscation and penalties imposed on the appellants.

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Issues:
Correct determination of assessable value of goods manufactured by job workers.

Analysis:
The appeals before the Appellate Tribunal CEGAT, Kolkata involved the correct determination of the assessable value of goods manufactured by two job workers, namely M/s. Reddy & Sons and M/s. Gahalaut & Chaudhary Steel (P) Ltd. These job workers were engaged in twisting bars from untwisted bars of iron and steel supplied by M/s. TISCO. The Commissioner of Central Excise, Jamshedpur, in the Orders-in-Original dated 15-10-1997 and 20-10-1997, determined the assessable value by considering the selling price at which M/s. TISCO sold the goods from its stockyard as the normal price. The Commissioner included distribution charges of Rs. 600.00 per MT incurred by M/s. TISCO and freight charges of Rs. 60.00 per MT for transporting raw materials to the job workers in the assessable value.

The advocate for the appellants argued that the assessable value should be determined based on the cost of raw materials in the hands of the job workers, the value of job work done, and the manufacturing profit and expenses of the job workers, citing the Supreme Court's judgment in the case of Ujagar Prints v. Union of India. The advocate further referenced several cases where the principles laid down in the Ujagar Prints case were followed. The advocate also agreed that the cost of Rs. 60.00 per MT incurred by M/s. TISCO for transferring raw materials to the job workers' premises should be included in the assessable value.

The Tribunal, after considering the arguments and precedents, held that the addition of Rs. 600.00 per MT distribution charges incurred by M/s. TISCO should not be part of the assessable value of the goods. However, the Tribunal concluded that the Rs. 60.00 per MT freight charges incurred by M/s. TISCO for transporting raw materials to the job workers' factory should be added to the assessable value of the final product. The Tribunal allowed the appeals subject to the addition of Rs. 60.00 per MT in the assessable value and directed the authorities to recalculate the duty demand based on this order. Additionally, the Tribunal set aside the confiscation and penalty imposed on all the appellants.

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